Gaining the board's trust
Some aspects of Freescale Semiconductor’s compliance and ethics program cited by the judges as award-worthy include training of employees, enforcement mechanisms and the fact that chief ethics and compliance counsel Dathan Voelter, who is also assistant secretary, has direct access to the board’s audit committee.
Voelter meets quarterly with senior management to discuss the report of all the issues raised on the company’s ethics hotline, including the ethics and compliance department’s assessment of any trends such as particular kinds of conduct above historical norms or occurring predominantly in certain business units or regions. Those meetings generally include Freescale’s CEO, chief financial officer, general counsel, chief audit officer and senior vice president for human resources, says Tim Shelhamer, senior securities and ethics counsel, who supports Voelter on the team. ‘Usually, out of that discussion will come a conversation about what, if any, action needs to be taken,’ he adds.
Voelter has developed a good rapport with the chairman of the board and other board members, handling a range of issues ‘from the mundane to the serious,’ Shelhamer continues. ‘It wouldn’t be unusual for him to call any of the board members to discuss things. That kind of access is key when you need to talk about compliance opportunities or an area of corporate risk. The board trusts Dathan as it has worked with him for a long time.’
Creating a supportive workplace culture is a key aspect of Freescale’s compliance program. The code of conduct includes detailed sections on responsibility to fellow employees, touching on issues such as diversity, workplace health and safety provisions, and hiring practices. It also outlines the company’s responsibility to third-party service providers, describing purchasing practices and ways to ensure equal treatment.
Freescale has created an office of business conduct and ethics that oversees all investigations into allegations of misconduct. It also has regional business conduct and ethics committees that represent each of the three geographic regions in which it operates: Asia-Pacific, the Americas, and Europe, the Middle East and Africa. Comprising senior leaders from the legal, finance and human resources departments, the committees are able to recognize any operational or communication issues in their specific region that could pose a risk to the company.
As a result of Voelter’s interaction with the board, Freescale has revised certain parts of its compliance training based on direct feedback about the board’s expectations and areas of risk it wants to see addressed, Shelhamer says. ‘The more you’re used to working with someone and have his/her trust, the more willing you are to offer suggestions and thoughts on an issue.’